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China realizes the diversified development strategy of foundry enterprises

China realizes the diversified development strategy of foundry enterprises

  • Categories:Trade info
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  • Time of issue:2021-08-27
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(Summary description)Intoday’sglobalizedmarketeconomy,China’sstatusasamajormanufacturingcountryhasbeengraduallyweakened,manufacturinghasshiftedtoothercountriesandregions,increasedlaborcosts,andrapidlychangingmarketdemandshavemadeitmoreandmoredifficultforcompaniestosurvive.Inaddition,atthisstageContinuousenvironmentalgovernancehasmademanymanufacturingcompaniesworse.Allkindsofproblemshavecausedthecompany'slaborpainsbutalsoarousedathought:howtoenhancethecompany'santi-riskability,howtorealizethesustainabledevelopmentofthecompany,andletthecompanyfacevariouscrisescalmly?Infact,companiesinEurope,America,Japanandothercountrieshavealreadyusedfactstoanswerthisquestion:taketheroadofdiversifiedoperations.Diversifiedoperationisaninevitabledevelopmentstrategyforenterprisestobecomebiggerandstronger. Externalreasons:Themainreasonisthelimitationofmarketcapacity.Thesaturationofmarketdemandandthelimitedmarketcapacitywillencourageenterprisestoenternewindustrialfields.Atthesametime,thediversityanduncertaintyofmarketdemandwillalsoinducecompaniestodiversifytheiroperationstodiversifyrisksandseeknewdevelopmentspace. Internalreason:Inordertomakebetteruseoftheremainingresourcesoftheenterprise,toachieve"economyofscope"toagreaterextent.Scopeeconomyessentiallymeansthatmultiplebusinessesofanenterprisecansharetheresourcesoftheenterprise,especiallytheuseofsurplusresourcesoftheenterprise,includingbothtangibleresources(productioncapacity,marketing,servicesystems,technologydevelopmentandinnovationsystems,etc.),aswellasintangibleresources(Trademarks,corporategoodwill,managementskills,technology,knowledge,etc.). However,theexpansionofthescaleofanenterprisemustbeconsistentwiththemanagementabilityoftheenterprise,andatthesametime,themanagementabilitymustbeimproved.Otherwise,itwillbedifficulttomakethediversifiedbusinessdevelophealthily,anditwillevenhaveanadverseeffectonthemainbusinessandtheoriginaladvantagesoftheenterprise. Oneistogetmoreprofitsinnewareas.Thesecondistoallocatesomeresourcesindifferentareastoavoidrisks.Thegoalpursuedbymodernenterprisesisnottomaximizeprofitsbuttogrowsustainably.Itisamajortransformationfromasingleenterprisetoadiversifiedbasicgrowthmodel,anditisanexplorationorevenanexpeditiontonewareasofgrowth.Diversificationisanimportantstrategicturningpointinthegrowthofacompany,anditisakeypointwheredangersandopportunitiescoexist. China'sfoundrycompanieshaverelativelysimpleoperationsandpoorriskresistance.Whentheeconomicenvironmentisgood,thereisnoproblemincorporatedevelopment,butwhentheeconomicenvironmentdeteriorates,especiallyinrecentyears,economicrecessionandmalaise,plusthesecondhalfof2016Theinitial"stricterinhistory"environmentalprotectionmanagement,highenergyconsumption,andsingleproductmodelcausedalargenumberoffoundrycompaniestoclosetheirdoorsandshutdownforrectification.Inaddition,whenChinagraduallylostits“worldfactory”anditsmanufacturingindustrybegantoshifttoSoutheastAsiaandothercountries,China’sfoundryindustrywasgreatlyimpacted,andmarketdemanddroppedsharply.Thesingleproductproductionmodelmadeitdifficultfortraditionalfoundrycompaniestocopewithit.ManyfoundrycompaniesCanonlysitandwaittodie.Therefore,inthefaceofthecurrentnewsituation,itisabetterchoiceforfoundrycompaniestonotonlytransformandupgradethemselves,butalsotoreformulatetheircorporatedevelopmentstrategies,improvetheirabilitytoresistrisks,andtaketheroadofdiversifiedoperations.  Source:FoundryBranchofChineseMechanicalEngineeringSociety

China realizes the diversified development strategy of foundry enterprises

(Summary description)Intoday’sglobalizedmarketeconomy,China’sstatusasamajormanufacturingcountryhasbeengraduallyweakened,manufacturinghasshiftedtoothercountriesandregions,increasedlaborcosts,andrapidlychangingmarketdemandshavemadeitmoreandmoredifficultforcompaniestosurvive.Inaddition,atthisstageContinuousenvironmentalgovernancehasmademanymanufacturingcompaniesworse.Allkindsofproblemshavecausedthecompany'slaborpainsbutalsoarousedathought:howtoenhancethecompany'santi-riskability,howtorealizethesustainabledevelopmentofthecompany,andletthecompanyfacevariouscrisescalmly?Infact,companiesinEurope,America,Japanandothercountrieshavealreadyusedfactstoanswerthisquestion:taketheroadofdiversifiedoperations.Diversifiedoperationisaninevitabledevelopmentstrategyforenterprisestobecomebiggerandstronger. Externalreasons:Themainreasonisthelimitationofmarketcapacity.Thesaturationofmarketdemandandthelimitedmarketcapacitywillencourageenterprisestoenternewindustrialfields.Atthesametime,thediversityanduncertaintyofmarketdemandwillalsoinducecompaniestodiversifytheiroperationstodiversifyrisksandseeknewdevelopmentspace. Internalreason:Inordertomakebetteruseoftheremainingresourcesoftheenterprise,toachieve"economyofscope"toagreaterextent.Scopeeconomyessentiallymeansthatmultiplebusinessesofanenterprisecansharetheresourcesoftheenterprise,especiallytheuseofsurplusresourcesoftheenterprise,includingbothtangibleresources(productioncapacity,marketing,servicesystems,technologydevelopmentandinnovationsystems,etc.),aswellasintangibleresources(Trademarks,corporategoodwill,managementskills,technology,knowledge,etc.). However,theexpansionofthescaleofanenterprisemustbeconsistentwiththemanagementabilityoftheenterprise,andatthesametime,themanagementabilitymustbeimproved.Otherwise,itwillbedifficulttomakethediversifiedbusinessdevelophealthily,anditwillevenhaveanadverseeffectonthemainbusinessandtheoriginaladvantagesoftheenterprise. Oneistogetmoreprofitsinnewareas.Thesecondistoallocatesomeresourcesindifferentareastoavoidrisks.Thegoalpursuedbymodernenterprisesisnottomaximizeprofitsbuttogrowsustainably.Itisamajortransformationfromasingleenterprisetoadiversifiedbasicgrowthmodel,anditisanexplorationorevenanexpeditiontonewareasofgrowth.Diversificationisanimportantstrategicturningpointinthegrowthofacompany,anditisakeypointwheredangersandopportunitiescoexist. China'sfoundrycompanieshaverelativelysimpleoperationsandpoorriskresistance.Whentheeconomicenvironmentisgood,thereisnoproblemincorporatedevelopment,butwhentheeconomicenvironmentdeteriorates,especiallyinrecentyears,economicrecessionandmalaise,plusthesecondhalfof2016Theinitial"stricterinhistory"environmentalprotectionmanagement,highenergyconsumption,andsingleproductmodelcausedalargenumberoffoundrycompaniestoclosetheirdoorsandshutdownforrectification.Inaddition,whenChinagraduallylostits“worldfactory”anditsmanufacturingindustrybegantoshifttoSoutheastAsiaandothercountries,China’sfoundryindustrywasgreatlyimpacted,andmarketdemanddroppedsharply.Thesingleproductproductionmodelmadeitdifficultfortraditionalfoundrycompaniestocopewithit.ManyfoundrycompaniesCanonlysitandwaittodie.Therefore,inthefaceofthecurrentnewsituation,itisabetterchoiceforfoundrycompaniestonotonlytransformandupgradethemselves,butalsotoreformulatetheircorporatedevelopmentstrategies,improvetheirabilitytoresistrisks,andtaketheroadofdiversifiedoperations.  Source:FoundryBranchofChineseMechanicalEngineeringSociety

  • Categories:Trade info
  • Author:
  • Origin:
  • Time of issue:2021-08-27
  • Views:0
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In today’s globalized market economy, China’s status as a major manufacturing country has been gradually weakened, manufacturing has shifted to other countries and regions, increased labor costs, and rapidly changing market demands have made it more and more difficult for companies to survive. In addition, at this stage Continuous environmental governance has made many manufacturing companies worse. All kinds of problems have caused the company's labor pains but also aroused a thought: how to enhance the company's anti-risk ability, how to realize the sustainable development of the company, and let the company face various crises calmly? In fact, companies in Europe, America, Japan and other countries have already used facts to answer this question: take the road of diversified operations. Diversified operation is an inevitable development strategy for enterprises to become bigger and stronger.
 
External reasons: The main reason is the limitation of market capacity. The saturation of market demand and the limited market capacity will encourage enterprises to enter new industrial fields. At the same time, the diversity and uncertainty of market demand will also induce companies to diversify their operations to diversify risks and seek new development space.
 
Internal reason: In order to make better use of the remaining resources of the enterprise, to achieve "economy of scope" to a greater extent. Scope economy essentially means that multiple businesses of an enterprise can share the resources of the enterprise, especially the use of surplus resources of the enterprise, including both tangible resources (production capacity, marketing, service systems, technology development and innovation systems, etc.), as well as intangible resources ( Trademarks, corporate goodwill, management skills, technology, knowledge, etc.).
 
However, the expansion of the scale of an enterprise must be consistent with the management ability of the enterprise, and at the same time, the management ability must be improved. Otherwise, it will be difficult to make the diversified business develop healthily, and it will even have an adverse effect on the main business and the original advantages of the enterprise.
 
One is to get more profits in new areas. The second is to allocate some resources in different areas to avoid risks. The goal pursued by modern enterprises is not to maximize profits but to grow sustainably. It is a major transformation from a single enterprise to a diversified basic growth model, and it is an exploration or even an expedition to new areas of growth. Diversification is an important strategic turning point in the growth of a company, and it is a key point where dangers and opportunities coexist.
 
China's foundry companies have relatively simple operations and poor risk resistance. When the economic environment is good, there is no problem in corporate development, but when the economic environment deteriorates, especially in recent years, economic recession and malaise, plus the second half of 2016 The initial "stricter in history" environmental protection management, high energy consumption, and single product model caused a large number of foundry companies to close their doors and shut down for rectification. In addition, when China gradually lost its “world factory” and its manufacturing industry began to shift to Southeast Asia and other countries, China’s foundry industry was greatly impacted, and market demand dropped sharply. The single product production model made it difficult for traditional foundry companies to cope with it. Many foundry companies Can only sit and wait to die. Therefore, in the face of the current new situation, it is a better choice for foundry companies to not only transform and upgrade themselves, but also to reformulate their corporate development strategies, improve their ability to resist risks, and take the road of diversified operations.
 
 
Source: Foundry Branch of Chinese Mechanical Engineering Society
 
 
 
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